Recession-struck entrepreneurs desperate for accountant's advice

New research by accountsIQ reveals the nation’s SMEs are crying out for more quality time with their accountants. The online accountancy solutions provider commissioned Vanson Bourne to look at the relationship between small business owners and their accountants, and found the recession had left 82% eager for better guidance.

This figure compliments recent surveys by Graydon UK and the Forum of Private Business (FBP) that both cited the accountant as the entrepreneur’s most trusted business advisor.

Clients are crying out for help. Accountants are so well placed to help, because they have the trust of their clients.The only potential barriers that I see for some are a) does the accountant have all the skills to really help? Ok, they are OK at financials, but what about consulting, problem-solving, market positioning, waste management and b) can they forget the timesheet for just a few days and focus on adding value to the client, rather than adding hours on a time sheet?

I have no doubt that there are opportunities, although perhaps fewer than there should be - (by that I mean that many SMEs have an instinctive reaction to cut costs - it is only the only the smart minority that will provide the opportunities and be prepared to invest in financial management (& also marketing).

It does seem that SME owners naturally turn to their accountants for support. But I am not sure that many smaller accountants in the UK have the time (& in some cases the skills) to help with things like regular forward planning, improving cash management & risk management. If this is outside practitioners' comfort zone or they can't devote the time (& are unwilling to buy skills in) then I believe they are missing out on an opportunity - & potentially letting clients down.

I believe the “Credit Crunch” is being sold very well in the market and it could be capitalized as a very big opportunity.

An accountant is the most trusted advisor for a small and medium business and whom the business owner trust more than his spouse for his finances.

I think the times are tough and the small and medium business who cannot afford to have full time expert advise would seek help from their accountant for advise and they are the best suited who could capitalise this opportunity.

The common man on the road is now talking about recession, liquidity crunch, credit crunch and which makes half the idea sold and the balance half has to be sold by accountants.

Whilst technology will help information to be prepared in an understandable way, I do feel that the right skills are needed to understand and respond to the information. (The survey was commissioned by an IT firm and seems to support this view)

Whilst larger businesses will have finance personnel with (hopefully) the right mindset, in an SME the financial management skills and mindset may not exist in house. If the mindset is not there then technology is unlikely to achieve its potential may even be detrimental.

A sales orientated business owner may be instinctively unwilling to get heavy with a customer who is late paying. Technology might highlight overdue customer accounts (in many SMEs the owners will know this anyway). However it is only by discussion that the appropriate course of action can be found

We have seem many small business owners swamped with day to day operations who place little value on forecasting. Invariable the systems the use produce standard reports that are out of date when reviewed. They do not provide key information, but deliver an abundance of discionnected information.

An investment in Excel Friendly OLAP tool and a good reporting model can automate the reporting of Key information and facilitate driver based forecasting to produce forecast P&L's, Balance Sheets and Cashflows. This enables business owners to spend their time developing the business in the right direction. If the information is structured in a smart way, less is more.

An insolvency practitionerI at a seminar I recently attended, said that 80% of SME insolvencies are caused through poor financial management and this is mostly due to a skills gap.

I am a former partner in a medium sized West End practice, who now provides FD and project services to businesses. During last autumn I saw that SMEs would need extra support with their financial mangement (ie:producing reliable & relevant management information, improving cash management, looking at where the business is heading and proactively addressing issues created by the current environment).

I went through a spell of connecting with small practitioners, as I felt that there should be opportunities where my complimentary skills could help clients and perhaps some sort of tie in could be worked out. I found small practitioners to be very unreceptive - despite their clients having the biggest skills gap.

SME owners look to their accountants for advice, but most (but not all) SME accountants have what i would describe as a tax mindset and themselves do not really have the skills to provide the financial management support that clients are crying out for.

Cost is clearly an issue for business owners and there is doubtless an instinctive reaction to cut back. However, notwithstanding this there should be opportunities for the proactive accountant - particularly with businesses of say £1m+ turnover (for ongoing support) , but also for smaller businesses in an advisory capacity. The charge out model may differ to traditional practice rates, but it should create margin, add value to the client relationship and help make sure that there still is a client in a year's time.

I would suggest that if clients need to improve their financial management but genuinely can't afford the cost then perhaps they should be introduced to an insolvency practitioner sooner rather than later.

Interestingly I have found accountants in larger firms to be much less reticent and have therfore almost given up on their smaller firm counterparts . However I still would be interested in talking to open minded small/medium firms who realise that for many businesses the tax bill is not the most pressing consideration (I am based in North West London).